AML/CFT Compliance Flashcards

What are the three stages of money laundering?

Answer: Placement, layering, and integration

Money laundering typically occurs in three stages: Placement (introducing illegal funds into the financial system), Layering (conducting complex transactions to obscure the trail), and Integration (reintroducing the laundered funds into the legitimate economy as clean money).

What is 'structuring' (also known as 'smurfing') in the context of money laundering?

Answer: Breaking up large cash transactions into smaller amounts to avoid triggering mandatory reporting thresholds

Structuring involves deliberately breaking up large transactions into smaller amounts to avoid triggering mandatory reporting thresholds. It is itself a criminal offence under Singapore's CDSA, independent of any underlying money laundering offence.

What is a Politically Exposed Person (PEP) under MAS guidelines?

Answer: An individual who is or has been entrusted with a prominent public function, and their immediate family members and close associates

A PEP is an individual who holds or has held a prominent public function (such as heads of state, senior politicians, government officials, judicial officers, senior military officials, or senior executives of state-owned enterprises) as well as their immediate family members and close associates.

Under Singapore's AML/CFT framework, what does Customer Due Diligence (CDD) involve?

Answer: Identifying and verifying customer identity, understanding the nature of the business relationship, and assessing money laundering and terrorism financing risks

CDD involves identifying and verifying the identity of customers (and beneficial owners), understanding the nature and purpose of the business relationship, and assessing the AML/CFT risk profile. It must be conducted at account opening and on an ongoing basis throughout the relationship.

When must Enhanced Due Diligence (EDD) be applied?

Answer: When dealing with Politically Exposed Persons, high-risk customers, or customers from high-risk jurisdictions

EDD must be applied in higher-risk situations, including when dealing with PEPs, customers from high-risk jurisdictions identified by FATF, or others assessed as higher risk. EDD involves more detailed and intrusive checks than standard CDD.

Suspicious Transaction Reports (STRs) in Singapore must be filed with:

Answer: The Suspicious Transaction Reporting Office (STRO) under the Singapore Police Force

STRs must be filed with STRO, which operates under the Singapore Police Force as Singapore's financial intelligence unit (FIU). STRO analyses reports for money laundering and terrorism financing and shares intelligence with law enforcement and regulators.